After a tumultuous 2022 marked by market upheavals and controversies, including the collapse of FTX and legal issues involving its CEO, Sam Bankman-Fried, cryptocurrency investors are gearing up for pivotal factors shaping 2024. The year 2023 concluded on a high note, with cryptocurrencies recovering from the previous year’s challenges.
Bitcoin, the leading cryptocurrency, showcased a remarkable performance, more than doubling its value and hitting a 20-month peak of $42,000 per token in November, marking its best year since 2020 in terms of percentage gains.
Optimism has been bolstered by expectations of global central banks scaling back rate hikes and potentially initiating easing measures next year amidst cooling inflation. Additionally, anticipation for the approval of a spot bitcoin exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC) has contributed to market positivity.
Analysts foresee these factors, coupled with Bitcoin’s projected April “halving” process that reduces token supply, as favorable for the market in 2024. However, some caution against the expectation of reaching the record highs seen in 2021.
James Butterfill from CoinShares highlighted the potential impact of the end of the rate cycle, noting that previous Bitcoin market declines were linked to rising interest rates. The anticipated rate cuts might fuel the next rally.
While the Federal Reserve recently maintained interest rates, signaling stability, doubts linger about a quick rate cut next year, as Friday’s strong employment data challenged expectations of an early rate reduction.
The launch of a bitcoin ETF is seen as a possible industry legitimization despite ongoing scandals. Talks of SEC approvals for these ETFs ahead of a key January deadline have kept traders optimistic, although a sell-off upon news arrival is plausible.
The upcoming bitcoin “halving” expected in April remains a focus for many investors, historically causing rallies but uncertainty prevails about its impact this time given varied market conditions.
Overall, market watchers remain cautiously optimistic, considering multiple factors’ interplay in 2024, including potential rate cuts, ETF approvals, and the upcoming halving’s influence on Bitcoin’s trajectory.
